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ISIS faces budget crunch, killing perks and slashing salaries

The Islamic State group, which once bragged about offering good salaries and perks to its recruits, is facing a cash shortage.

Iraqi security forces celebrate with a captured Islamic State flag in Ramadi, Iraq, on Jan. 19. Victories against the Islamic State in Iraq and Syria, and changes to Iraqi government policies, have created a cash crunch for the extremist group. (Uncredited / AP)

By Lori Hinnant,Zeina KaramSusannah George

Tues., Feb. 16, 2016

BEIRUT—Faced with a cash shortage in its so-called caliphate, the Islamic State group has slashed salaries across the region, asked Raqqa residents to pay utility bills in black-market American dollars, and is now releasing detainees for a price of $500 (U.S.) a person.

Having built up loyalty among militants with good salaries and honeymoon and baby bonuses, the Islamic State has stopped providing even the smaller perks: free energy drinks and Snickers bars.

That’s according to interviews with exiles and people still under Islamic State rule, many of whom spoke under condition of anonymity over concerns for their safety.

In Raqqa, the Islamic State’s stronghold in Syria, salaries have been halved since December, electricity is rationed, and prices for basics are spiralling out of reach, according people exiled from the city.

“Not just the militants. Any civil servant, from the courts to the schools, they cut their salary by 50 per cent,” said a Raqqa activist now living in the Turkish city of Gaziantep.

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Within the last two weeks, the extremist group started accepting only dollars for “tax” payments, water and electric bills, the activist said. “Everything is paid in dollars.”

The Islamic State needs money to replace weapons lost in airstrikes and battles, and pay its fighters. Those two expenses account for two-thirds of its budget, according to an estimate by Aymenn Jawad al-Tamimi, a researcher with the Middle East Forum who sources Islamic State documents.

One such document announced the salary cuts in Raqqa: “On account of the exceptional circumstances the Islamic State is facing, it has been decided to reduce the salaries that are paid to all mujahedeen by half, and it is not allowed for anyone to be exempted from this decision, whatever his position.”

Those circumstances include the dramatic drop in global prices for oil — once a key source of income — coalition and Russian airstrikes, supply line cuts, and crucially, the Iraqi government’s decision to stop paying civil servants in Islamic State territory.

A former Raqqa resident now living in Beirut said Syrians abroad are sending remittances in dollars to cover skyrocketing prices for vegetables and sugar.

In Iraq, where Islamic State has slowly lost ground, the Iraqi government in September cut off salaries to government workers within territory controlled by the extremists. Iraqi officials estimate that Islamic State taxed those salaries at 20 to 50 per cent, and are now losing $10 million a month.

In the Iraqi city of Fallujah, fighters who once made $400 a month aren’t being paid at all and their food rations have been cut to two meals a day, according to a resident. Another family trapped in Fallujah said inhabitants can only leave the city if they pay $1,000 — a sum well beyond the means of most in the Sunni-majority city that fell to Islamic State in 2014.

Islamic State is also allowing Fallujah residents to pay $500 for the release of a detainee, the family said.

Mosul residents say Islamic State has begun fining citizens who do not adhere to its strict dress code, rather than flogging them as before. The residents say they believe this is in response to financial problems in part because the group has already confiscated anything valuable, namely cars and other goods that are later resold in Syria.

The Soufan Group think tank, in a Jan. 27 analysis, said Islamic State is looking for money in Libya, where it is under less pressure — and doesn’t face airstrikes. And fighters there still get their food baskets and free electricity — even if, as one of the Raqqa exiles said, they no longer get Snickers bars and energy drinks.

“I don’t think this is fatal,” said al-Tamimi. “I still don’t see internal revolt as what’s going to be the outcome. It’s more like a scenario of gradual decay and decline.”

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